Budget indecision 'threatens Olympics'

National Audit Office warns of risk of budget uncertainty
National Audit Office warns of risk of budget uncertainty

The failure to agree a budget for the London 2012 Olympics could have a "detrimental impact" on the Games, the government's financial watchdog has warned.

A progress report from the National Audit Office (NAO) says the lack of certainty makes it difficult to plan for the project and could also increase the budget further by reducing the project's attractiveness to sponsors and undermining contract negotiations.

"It is clearly important that the budget set for the Games is robust and soundly based. However, the longer the lack of an agreed budget goes on, the greater the risk of it having an adverse impact on the Olympic programme," the watchdog says.

The report comes amid growing concern about the costs of the London 2012 Olympic Games. Last week, a committee of MPs said it was "very disappointed" that the budget had increased so much since the original bid was won just 18 months ago.

So far, the government has only admitted extra costs of £900 million for the Olympic park, but increases are expected for security and the contingency fund. In addition, the Treasury has yet to decide on the tax status of the Games, which could inflate costs.

The original budget included £2.375 billion in public money, £1.5 billion of lottery money and £1.044 billion from the government for infrastructure on the Olympic site.

Auditor general John Bourn said today: "Finalising the budget should be a priority to allow the Olympic programme to move forward with greater confidence and certainty."

Shadow sports minister Hugh Robertson said the combination of today's report and that of the select committee last week were a damning indictment of the government.

"It is entirely the government's fault that the bid budget was so incompetently drawn up and it is their mismanagement of the inevitable aftermath that is doing so much damage to the Olympic process," he said.

Liberal Democrat culture spokesman Don Foster warned that the "vicious cycle" set out in today's report made clear the need for a new, independently audited budget, drawn up with full debate by the public and MPs.

But a spokesman for the Department for Culture, Media and Sport (DCMS) insisted it had been engaged in a "rigorous review of costs" since London won the Games in July 2005 and was committed to "as much transparency as possible".

He welcomed the NAO's recognition of the progress made in establishing the delivery structures for the Games and acquiring nearly all the land, adding: "London 2012 represents a tremendous opportunity for London and for the entire country."

For more comment on the Olympic budget click here.


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